Thank you for reading EUobserver!

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

The text is based on an internal report by EU heads of mission in Israel which looks at developments in the so-called Area C in the West Bank.

One EU diplomat told EUobserver the EU-27 - including pro-Israeli countries like the Netherlands and the Czech Republic - already endorsed a demarche to Israeli authorities on the subject on 22 December.

Area C covers 62 percent of the occupied West Bank and was designated by the Oslo Accords in the 1990s as being under full Israeli civilian and military control.

The EU heads of mission report - seen by EUobserver - notes that between 200,000 and 320,000 Palestinians used to live in the Jordan Valley, most of which is in Area C, in 1967, but demolition of Palestinian homes and prevention of new buildings has seen the number drop to 56,000.

In a similar period, the Jewish population in Area C has grown from 1,200 to 310,000.

"The window for a two-state solution is rapidly closing with the continued expansion of Israeli settlements and access restrictions for Palestinians in Area C [which] compromises crucial natural resources and land for the future demographic and economic growth of a viable Palestinian state," the text says.

It adds that Israeli policy amounts to "forced transfer of the native population" from its "most fertile and resource rich land."

EU foreign affairs spokeswoman Maja Kocjancic confirmed that the leaked report is authentic but said it is "too early" to guess what foreign ministers will say.

A Brussels-based Israeli diplomat said the EU should concentrate on promoting Israeli-Palestinian peace talks instead of talking about settlements.

"It is not always helpful to put all this emphasis on this one issue, which should be left for the negotiations. Now that there are some promising signs the EU should not focus on, I would even say pre-judge, the outcome of negotiations on any one core issue," he said, referring to recent meetings between Israeli and Plaestinian envoys in Jordan.

Area C is a novelty in terms of EU policy after previous EU heads of mission reports in Israel concentrated on settlement activity in occupied East Jerusalem. The new twist was a Swedish initiative.

EU diplomats in recent weeks also took Israel to task on new laws limiting the rights of Arab Israeli citizens inside Israel proper.

Their internal paper on the subject - seen by EUobserver - said: "We should emphasise that addressing inequality within Israel is integral to Israel's long-term stability."

The Israeli parliament, the Knesset this week rejected a petition to drop a law preventing Arab Israelis who marry people from the other side of the green line from bringing their new families to live in Israel.

Arab Israeli MP Mohammed Barakeh told Haaretz: "This law, which differentiates between people in a repulsive, racist fashion ... denies Arabs their right to choose their life partner."

Otniel Schneller, an MP from the centrist opposition party, Kadima told the Jerusalem Post the law "articulates the rationale of separation between the [two] peoples and the need to maintain a Jewish majority and the [Jewish] character of the state."

Amendment: The story was amended at 6.30pm Brussels time on 13 January, giving more details on Area C population figures after EUobserver saw a copy of the leaked report

Opinion

While few people in Europe have heard of the 'Achmea' ruling, the case will have far-reaching consequences. Member states must understand the implications of the case quickly - especially those considering ratifying the EU-Canada trade agreement.